ABB's Electrification Segment Gains Pace: More Upside to Come?

ABB Ltd’s ABBNY Electrification segment is playing an important role in driving its overall growth. Solid customer activities in major markets, including utilities and buildings, are aiding the segment’s performance. Positive momentum in the data center business has been driving orders across the company’s Americas and Asia, Middle East and Africa (AMEA) markets. In the first quarter of 2025, the segment’s order totaled $4.39 billion, up 2% year over year on a comparable basis. The order backlog reached a record level of $8.17 billion compared with $7.39 billion reported at the end of the year-ago quarter. Its revenues rose 6%, year over year, on a comparable basis during the same period.

The segment is benefiting from the steady execution of its order backlog, particularly in medium voltage and power protection businesses. Improving customer activity in the short-cycle business and increased project wins across multiple divisions also bode well. Also, the acquisition of Siemens’ Wiring Accessories (March 2025) is expected to support the Electrification segment’s revenue growth in the quarters ahead.

However, muted customer demand in the hyperscale data center and weakness in the residential building market in China are concerning. Alos, global uncertainty related to trade policies could weigh on the segment’s near-term performance. Despite these risks, ongoing electrification trends, a strong order backlog and robust customer demand position ABB’s Electrification segment to deliver continued growth in the coming quarters.

Segment Snapshot of ABB's Peers

Among its major peers, Eaton Corporation plc’s ETN Electrical Americas segment reported net sales of $3.01 billion in the first quarter of 2025, up 11.9% year over year. Eaton generated 47% of its total sales from this segment in the quarter. Eaton’s backlog, with orders, at the end of the first quarter, increased 6% in the Electrical Americas segment.

EnerSys’ ENS Energy Systems segment generated net sales of $399 million in fourth-quarter fiscal 2025, up 8% year over year. EnerSys’ segment’s revenues increased, driven by robust growth across data centers and continued recovery in the U.S. Communications market.  EnerSys derived 40.9% of its total revenues from this segment during the quarter.

ABBNY’s Price Performance, Valuation and Estimates

Shares of ABB have gained 13% in the past six months compared with the industry’s growth of 6.5%.

From a valuation standpoint, ABBNY is trading at a forward price-to-earnings ratio of 23.61X, above the industry’s average of 23.13X. ABB carries a Value Score of C.

The Zacks Consensus Estimate for ABB’s second-quarter 2025 earnings has declined over the past 60 days.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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